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- Form 2555: Claims the Foreign Earned Income Exclusion (FEIE), which excludes up to $130,000 for 2025 or $132,900 for 2026 of foreign earned income from U.S. tax.
- You need a foreign tax home and must pass the Physical Presence Test (330 full days abroad) or the Bona Fide Residence Test.
- Wages and self-employment income qualify. Dividends, interest, and rental income do not.
- Attach Form 2555 to Form 1040 by April 15, 2027, for tax year 2026. Taxpayers abroad generally receive an automatic extension to June 15, 2027.
- The FEIE may suit taxpayers in low-tax countries, while the Foreign Tax Credit may offer more benefit in high-tax countries, depending on individual circumstances.
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